Singapore Faces a Grim Labor Future as Population Ages Rapidly

[CY09]

Hi specuvestor,

Thanks for pointing out the mathematical error made by me. But just wondering do we then leave this expensive workforce to do work which harms the wealth of the citizenry? Isn't it a worse off situation?

[kichialo]

I am going to be painfully blunt.

Currently there are about 24,000 "sales persons" in the financial advisory line for our entire population of 5mil+. Conversely in US, the ratio stands at 1 "sales person" to 1,000 Americans.

If Singaporeans grow more financially literate/aware/conscious (whatever term you like to give), we can free 18,000 people from insurance jobs that are "destroying" the financial wealth of the people in our country; relocate them to replace industries suffering from a labour shortage. The current employment workforce of Singapore is 3,673,100 people (as of 31 Dec 2016). Freeing up 18,000 people is like "magically" boosting your workforce by 5%. This will definitely offset the 1.7% and 2.5% labor shrinkage the economists are so worried about

We just need to be smarter in managing our country's resources.

<Hoping MOM, MTI, MOF, MAS are reading this to understand the real problem and not via some scholarly paper>

I will play devil's advocate and say that it is "transferring of wealth" rather than "destroying". As the saying goes fools and their money are soon parted. The money is now arguably in better hands and utilised more efficiently. The reason the 24,000 are not in industries suffering labour shortage must say something about the nature of remuneration of these industries. Perhaps it is these uncompetitive industries that need to shape up or ship out and let the labour market sort itself out.

[tanjm]

Some thoughts.

In the not so distant past, most people were involved in producing things - food, cars, houses, etc. Many of these things needed economies of scale to do well.

Now, much of any advanced nation's economy is in "services". There's nothing inherently more wrong about an insurance agent (apologies to insurance agents lurking here) than a travel agent or a fashion model. All of them are filling in the demand for their services in a modern economy.

What is wrong is that policy makers insist that GDP must always be expanding, and that labor input is part of that equation. We tend to measure the sum of all welfare to a person in terms of GDP per capita. Is that the right way to measure welfare?

In the 4th industrial revolution, more and more *things* are going to be produced with less and less labor. Even services are on board this - google has 72,000 employees with 90 billion in revenue or 1.2 million dollars per employee. Assuming Singapore scales the 4th industrial revolution safely, your issue is going to be finding jobs for your population or perhaps we undergo a new social revolution where it is ok to not work, or work only occasionally.

[tanjm]

I hope to live long enough to a future where professions (i'm making this up) like this exist simply because we can:
entertainment advisor
social media relationship personal manager
urban ecology consultant
social ranking optimization specialist
professional party goer
personal travel planner
eldercare consultant
personal hygienist

[wsreader]

^---I think many of these job titles are aka influencers. They already existed and are well paid by sponsors.

[tanjm]

I'm limited by my imagination. See whatever you want to see in the list. Feel free to add your own. The point is there will be jobs we can't imagine and many of them, the present generation may think are frivolous.

On a side note.

The "Black Mirror" TV series is interesting as speculation about the near future, and some episodes are actually not totally fantasy. See "The Waldo Moment", or "Nosedive". I especially like "Nosedive".

[specuvestor]

Hi specuvestor,

Thanks for pointing out the mathematical error made by me. But just wondering do we then leave this expensive workforce to do work which harms the wealth of the citizenry? Isn't it a worse off situation?

Hi CY09

In the first place I'm not sure things are as linear as it seems. For example lowering FX value improves exports and foreign reserves but effectively using citizens' wealth to subsidize exports. Is that worse off or better off?

I'm not sure whether this term 4th Industrial Revolution will be around a decade down the road but what I see is actually the demise of the middle man, be it exporters to retailers, agents, brokers, and yes even active FM VS ETF. And of course even news distributions through the national or regional dailies.

So the fundamental question to ask is: is there value in middleman? Do we need doctors to prescribe medicine or we read up and self medicate. Do we need insurance agents or brokers to give better decision process? Do we trust WSJ or some blogs / influencers on real non-fake news ( this forum included)  

Personally I think the right agents are useful but certainly access to information makes their role much more competitive. They can no longer just do simple back-to-back transactions.

[tanjm]

So the fundamental question to ask is: is there value in middleman? Do we need doctors to prescribe medicine or we read up and self medicate. Do we need insurance agents or brokers to give better decision process? Do we trust WSJ or some blogs / influencers on real non-fake news ( this forum included)  

Personally I think the right agents are useful but certainly access to information makes their role much more competitive. They can no longer just do simple back-to-back transactions.

Middlemen exist for various reasons, but one of them is information asymmetry. In economics, information asymmetry is one of the classic "market failures" that prevent "perfect competition" in micro-economic models. With peer to peer transactions being lubricated, we can see this frictional cost to the system being removed.

But what if you are a middleman who applies expertise and services the "bounded rationality" of consumers. That's not so easy to get rid of. The border between a useful middleman and one not so useful is also not always so easy to tell. Ultimately they may not disappear, but their jobs will transform and there'll probably be less of them.

I just realized I basically agree with you. 8-) haha. I simply restated it in economics language.

[specuvestor]

Actually aggregators are also middle-man. From your AirBnB to Google. The asymmetry is becoming more like information overload that we need a middleman to filter for us.

In addition there is the value of time. Nope I'm not talking about TVM. The reality is that a business man's time is more expensive than say a teenager's time. So the former need a middle man for his transactions, from legal to accounts to petty stuff. Or even someone to queue to get a number for property purchase As the purchasing power increases, urbanites don't build their own toy, knit their own clothes or build their own computer

End of day is what value the middleman adds to the decision or operational process